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Timing is Everything in the Investment Cycle

Consider the economic business cycle when making investment decisions.

In order to make the most of investments, maximize profits and protect themselves from risk, corporations, investors and funds should base their investment decisions on where the economy stands in relation to the standard business cycle, Seeking Alpha argues.

"Timing the cycle can dramatically lower investment risk and in rough economic times this becomes vital," the source says, since it allows the organization or individual to "position themselves to profit from larger degree moves in the economy."

Through calculations based on year-over-year GDP performance and fluctuations in the London Interbank Offered Rate (LIBOR), the news outlet concludes that the economic cycle is currently in the early contraction phase. With that in mind, "smart money" will shift from the "beta sectors," such as energy and basic materials, to more defensive industries, such as healthcare, consumer staples and utilities.

That said, current market volatility may be defying any hopes of creating a reliable forecast, not to mention acting and profiting on those predictions. Reuters reports that business spending took a hit in July, although it points to Commerce Department data that showed there were more orders of long-lasting manufactured goods in the first month of the new quarter. The news source warns that stock market performance may mean the government's numbers are "offering a rosier view" than the economic reality.

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